FairPoint hit by allegation of faked readiness test

Posted
Monday, August 24, 2009 10:12 pm

By DAVE GRAM

MONTPELIER -- Regulators in Vermont, New Hampshire and Maine are looking into an allegation that FairPoint Communications faked its readiness to take over the region’s dominant phone network from Verizon during a review by a consultant to the states, officials said Monday.

FairPoint has been hit with unprecedented numbers of consumer complaints ranging from billing errors and service order delays to long waits on call-in complaint lines since it took over Verizon’s phone networks in the three states Feb. 1.

Now state regulators are reviewing an anonymous e-mail from someone believed by a Maine regulator to be a FairPoint insider who charges that during tests leading up to the Feb. 1 "cutover," FairPoint created a computer program "to deceive the audience into believing they were watching a real demonstration" of its readiness.

FairPoint issued a statement quoting its CEO, David Hauser, saying, "We take these allegations seriously and will do a thorough investigation," Hauser, who took over as FairPoint CEO in June, noted that the company has a link on its Web site for employees and others to report alleged ethics violations.

Two calls to FairPoint’s corporate headquarters in Charlotte, N.C., seeking further comment were not immediately returned.

A woman who answered the phone at the headquarters of the consulting firm, Liberty Consulting of Quentin, Penn., said the company would have no comment.

The Vermont Public Service Board, which regulates telephone and other utilities in the state, said it had requested that FairPoint respond to the allegations raised in the e-mail by next Monday, Aug. 31.

State consumer advocate offices in New Hampshire and Maine said they had asked their commissions to investigate the matter.

"We’re extremely concerned about this," said Wayne Jortner, senior counsel to the public advocate in Maine. "It’s consistent with other things we’ve heard from other persons who’ve come forward anonymously. ... We don’t presume the truth of the allegations, but we would like to know what the answer is."

FairPoint, based in Charlotte, N.C., has faced a litany of problems getting ready for and then taking over the $2.3 billion phone network acquisition it made from Verizon last year. Earlier this month, the Vermont board opened a probe into whether to revoke FairPoint’s right to do business in the state.

Regulators from all three states are planning on a joint hearing in New Hampshire on Sept. 9 on problems plaguing the company and its customers.

The anonymous e-mail writer said in response to e-mailed questions from The Associated Press that the alleged deceit took place during a multi-day series of demonstrations in Atlanta by FairPoint to Liberty of its purported readiness to begin running a phone system serving most of the three northern New England states.

In his original e-mail, sent Aug. 14 to regulators, the writer, who called himself "David Unavailable," wrote:

"As January neared and it appeared to everyone on site in Atlanta that there would be another delay, suddenly Peter Nixon (FairPoint’s president) and Gene Johnson (its then-CEO) made the announcement that the cut to the new systems would take place at the end of January and the relationship with Verizon would end. Most people were stunned as it did not appear feasible."

In his later note to the AP, the writer said FairPoint had a strong incentive to complete the cutover: It was paying monthly fees to Verizon for continuing to use its system after the sale between the two companies closed. This was confirmed by a report filed by Liberty with state regulators.

The writer told regulators that "when Liberty was watching what they thought was ‘flow thru’ within a system and from one system to another, they were really only seeing a small program that was created to assimilate what they wanted the systems to do. They were not actually in the systems at the time nor were they in the test systems. They were in a newly created small program that used screen shots from the real system to deceive the audience into believing that they were watching a real demonstration."

Meredith Hatfield, New Hampshire’s public advocate, said if the allegation is borne out, it may help answer a question that has been haunting regulators since last winter: "Why didn’t people see the significant major problems" that FairPoint would have after taking over the system?

"To hear now this allegation that although Liberty thought that they were seeing the real testing, they were only seeing a small part of the testing or perhaps it was even created specifically to show to Liberty, it’s pretty disturbing if that is true and we certainly would hope that all three commissions would investigate this."

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